Introduction to Business

1. Introduction to Business (Features and Scope)

2. Meaning of Business / What is Business? • Business is the most creative socio-economic activity which looks after the material welfare of the entire society. • Generic term which comprises of all primary and ancillary activities involved in the production and distribution of goods and services. • Activities adopted to earn a profit. • Creation of utilities to satisfy wants which leads to creation of surplus and that is the basis of business. • Based on regular, continuous and growing demands. Com - 1 - Business Environment, Introduction to Business

3. Definitions of Business • According to Dictionary of Management by Derek French and Heather Saward, Business means “the activities of buying and selling goods, manufacturing or providing services in order to make profit.” • According to Wheeler B.O. business “is an institution organised and operated to provide goods and services to society under the incentive of private gain.” • According to Keith Davis, Business is “an organised effort by individuals to produce goods and services, to sell these goods and services in a market place and to reap some reward for this effort.” Com - 1 - Business Environment, Introduction to Business

4. Features / Characteristics of Business • Buying & selling • Dealings in goods and services • Regularity in dealings • Profit motive • Risks and uncertainties involved • Well organised and socially useful • Creative and dynamic • Participant in social system • Represents occupation • Social orientation • Global character Com - 1 - Business Environment, Introduction to Business

5. Functions / Needs of Business • Regular supply of goods and services • Satisfaction of human wants • Meaningful use of natural and other resources • Creation of employment opportunities • Provision of revenue to the government • Smooth and happy social life • Creation of a rich and developed country Com - 1 - Business Environment, Introduction to Business

6. Scope / Components / Branches of Business Business is a comprehensive term which includes production, marketing and other economic activities (called aids to trade) useful for orderly conduct of production and marketing activities. In the normal course, business activities can be conveniently classified into two broad components, viz. • Industry • Commerce Com - 1 - Business Environment, Introduction to Business

7. Com - 1 - Business Environment, Introduction to Business

8. A. Industry Com - 1 - Business Environment, Introduction to Business

9. Meaning: • The term industry refers to that part of business activity which directly concerns itself with procurement, production, processing or fabrication of goods and services. • It is a major element in the operating structure of the business system. • Industry creates form utility. [RM-FG(Con & Cap)] • It acts as a base of commerce. • Industry facilitates trading and other commercial activities. Com - 1 - Business Environment, Introduction to Business

10. Definition: • According to Wheeler, “ An industry is composed of a group of firms which compete with each other in serving approximately the same group of buyers, offering products that are reasonable close substitutes for one another.” Com - 1 - Business Environment, Introduction to Business

11. Types / Classification: • Extractive Industries • Genetic Industries • Manufacturing Industries • Construction Industries • Tertiary / Service Industries • Primary Industries Com - 1 - Business Environment, Introduction to Business

12. B. Commerce Com - 1 - Business Environment, Introduction to Business

13. Meaning: • Commerce is another component of business. • Exchange of goods and services. • Transfer of ownership of good and services. • Concerned with marketing and distribution activities. • Industry serves as the base of commerce and is called commerce when it is concerned with the exchange of commodities. • Includes all activities directly/indirectly related to distribution of goods and services i.e. Trade and Aids to Trade. Com - 1 - Business Environment, Introduction to Business

14. Definition: • According to James Stephenson, “Commerce is the sum total of those processes which are engaged in the removal of hindrances of persons (trade), place (transport and insurance) and time (warehousing) in the exchange (banking) of commodities.” Com - 1 - Business Environment, Introduction to Business

15. Trade: • Trade is the nucleus of commerce. • It involves buying and selling of goods and services. • Transfer of ownership against money. • Bridge between production and consumption. • Traders - wholesalers, retailers and mercantile agents. • Internal Trade (wholesale and retail). • Foreign Trade (import, export and re-export). Com - 1 - Business Environment, Introduction to Business

16. Aids to Trade: • Ancillary/auxiliary services – agencies useful for conducting trading activities. • They are transport, insurance, warehousing, banking, mercantile agents, advertising and publicity. • These agencies remove various hindrances to trading activities. • Hindrances – place, time, person and information. • To support and widen scope of trading activities. Com - 1 - Business Environment, Introduction to Business

17. Thank you Taruna R. Shroff Com - 1 - Business Environment, Introduction to Business